Human Resources, Human Resource Management, and the Competitive Advantage of Firms: Toward a More Comprehensive Model of Causal Linkages

We maintain that human resources are strategically significant in at least three cases, when these resources (1) help create traditional Ricardian rents; (2) function as components of organizational capabilities that generate nontraditional Ricardian rents; and (3) are the source of technological and managerial innovations that produce entrepreneurial rents. Human resource management (HRM) activities, on the other hand, assume strategic significance by supporting the three cases above through a process that we call managerial entrepreneurship. Furthermore, HRM takes on different forms when supporting each of these types of rents. Hence, this rent-based view has greater potential to help explain the contribution of human resources to firms' competitive advantages than approaches that are grounded in the resource-based view (RBV) of the firm, which primarily reflects the Ricardian view of rents. Moreover, a rent-based approach suggests fruitful new ways to address many of the theoretic challenges confronting the strategic human resource management (SHRM) literature.